Glossary · Reading the business
In short
This refers to businesses primarily involved in owning and renting real estate, rather than actively operating a business. Such activities are generally ineligible for SBA 7(a) loans.
The SBA 7(a) loan program is designed for operating businesses, not passive investments. If the target business's primary revenue comes from leasing property with minimal active management, it likely falls under "passive real estate activity" and is ineligible. Ensure the business you're acquiring has a clear operating component that meets SBA eligibility rules.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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